SBP issues regulations for banks to open accounts of retail merchants

SBP issues regulations for banks to open accounts of retail merchants

KARACHI: State Bank of Pakistan (SBP) on Friday launched rules and regulations for allowing banks to open bank accounts for retail merchants on soft conditions.

According to objectives of regulations issued by the central bank, to outline minimum due diligence requirements for on-boarding merchants based on simplified due diligence process.

Further, to facilitate in on-boarding merchants at various financial services access points and channels. To promote digital collection of payments from the sale of goods and services.

The SBP said that these regulations are applicable on Banks/MFBs, which may on-board individuals and self-employed merchants as per their institutional risk assessment framework.

The SBP said that banks/Microfinance Banks (MFBs) shall formulate merchant on-boarding policy in line with these regulations and duly approved the same from their board.

These regulations are not applicable on existing onboarding process of full-fledged merchants and Banks/MFBs shall onboard full-fledged merchants as per applicable laws and regulations.

The SBP said that banks/MFBs may offer these merchants accounts as Current, Savings or in any other remunerative category in Pak Rupees to individual and self-employed merchants only.

The banks/MFBs shall ensure that one CNIC holder can open only one merchant Account in a
Bank/MFB. The Banks/MFBs shall ensure that Merchant Accounts are only used for digital collection of payments against the provision of legitimate goods and services.

In order to open on-board merchant accounts, banks/MFBs shall collect following information in manual or digital form from merchants at the time of account opening:

i. Name of the merchant
ii. Valid CNIC number of the merchant
iii. Mobile number of the merchant
iv. Any other two information fields that are not present on CNIC such as place of birth and mother’s maiden name etc.
v. Address
vi. Merchant Type (by Profession)
vii. Expected per month turnover

Banks/MFBs shall activate Merchant Accounts after fulfilling following KYC/CDD requirements of merchant:

i. Perform Biometric Verification or Verisys from NADRA. In case of NADRA Verisys, Biometric Verification shall be mandatory at the time of first cash out or within three months of opening of these accounts, whichever is earlier. These accounts shall be deactivated if Biometric Verification is not carried out within three months of opening of accounts.

ii. Ensure Pre-screening of merchants’ particulars against lists of entities and individuals designated by the United Nations Security Council (UNSC), lists of entities and individuals proscribed under the Schedule-I and Schedule IV of the Anti-Terrorism Act, 1997, respectively, and any other applicable sanctions lists.

iii. Conduct Call Back Confirmation or generate One-Time Password (OTP) for verification from merchants.

iv. Carry out full or Enhanced Due Diligence of merchant as per Banks/MFBs own risk assessment, in light of applicable laws and regulations (if applicable).

v. Acceptance of terms and conditions of account provided in English and/or Urdu language by the merchant.

The SBP also notified following transactions limits for the accounts:

a) Banks/MFBs shall place following maximum transaction limits on merchant accounts:

i. Rs. 50,000 per month without Biometric Verification

ii. Rs. 500,000 per month with Biometric Verification

b) The above Transaction limits will be separately applied on Debit and Credit transactions.

c) Banks/MFBs may place lower transaction limits keeping in view their institutional risk assessment and high-risk geographical locations of merchants.

Merchant Account Balance

a) Banks/MFBs shall ensure that merchant accounts balance shall not exceed the following limits at any point of time:

i. Rs. 50,000 without Biometric Verification

ii. Rs. 500,000 with Biometric Verification